Articles Published in: 2012

July 4, 2012

FHA Appraisal Expiration Dates: Questions and Answers

When buying a home with an FHA guaranteed mortgage loan, one of the most important steps in the process is the appraisal. An FHA appraiser reviews the home to make sure it lives up to minimum property requirements and assigns a fair market value to the property. There are many common questions about FHA appraisals; here are some of them along with the answers. How Long Is An FHA Appraisal Valid? Buyers who purchased property prior to January 1, 2010 may have experienced a different set of standards, but currently, FHA appraisals are considered valid for 120 days. After that time they expire. According to FHA.gov, “Effective for all case numbers assigned on or after January 1, 2010 the validity period for all appraisals on existing, proposed, and under construction | more...

July 4, 2012

FHA Loan Questions: What are the Rules for a Non-Occupying Co-Borrower?

By Joe Wallace

FHA loans require the primary borrower to certify he or she will live on the property, using it as the “primary residence”. But FHA loans allow the option for a non-occupying co-borrower–someone who will be financially obligated on the loan but does not live on the property. FHA loan rules, as spelled out in HUD 4155.1 Chapter Two Section B, say of these types of FHA loan transactions: “When there are two or more borrowers, but one or more will not occupy the property as his/her principal residence, the maximum mortgage is limited to 75% loan-to-value (LTV). However, maximum financing, as described in HUD 4155.1 2.A.2, is available for

July 3, 2012

FHA Loans and Fair Housing Act Enforcement

By Joe Wallace

All lenders, including those who participate in the FHA loan program, are required to comply with Fair Housing Act laws. But in some cases the first line of defense against discrimination is with the borrower who files a complaint after receiving discriminatory treatment in violation of the Fair Housing Act. Fair Housing laws prohibits housing discrimination based on race, color, religion, national origin, sex, disability, or familial status. Borrowers who feel they’ve been discriminated against at any stage of the home buying process should report their complaints as instructed on the FHA official site, which says: “Email or contact us at (800)669-9777 and for the hearing impaired, please call TTY (800)927-9275″. Did you know there is support for such complaints in a variety of languages? Borrowers can find help in | more...

July 2, 2012

FHA Loan Assistance For Colorado Wildfire Victims

By Joe Wallace

The FHA has announced federal assistance for victims of Colorado wildfires living in two federally declared disaster areas. According to a HUD press release, HUDno.12-108, President Obama issued a disaster declaration for El Paso and Larimer Counties. “The President

June 29, 2012

Questions and Answers About Escrow Accounts and FHA Loans

By Joe Wallace

The Department of Housing and Urban Development official site at www.hud.gov offers a large amount of valuable resources for first time home buyers interested in purchasing a home with an FHA guaranteed mortgage loan. Among those resources are details of the Real Estate Settlement Procedures Act (RESPA) which governs a variety of aspects of the home loan process. One of those aspects is the escrow account–something many lenders may require as a part of doing business in a home loan transaction. What does RESPA say about escrow accounts? For starters, the FHA does not require an escrow account as a condition of loan approval. Escrow accounts may be required by the lender, but no lender should be telling you it’s because of FHA requirements or RESPA laws. HUD does regulate | more...

June 28, 2012

FHA Loan Reader Question: Checking Credit Scores

By Joe Wallace

A reader asks, “I did have bad credit at one time but I would say I have good credit now. I found out I had 2 things against me but I have taken care of them, they were small amounts but they would be the only thing against me over the past 5 years. I have paid off a car that I paid for over 5 years and also several small loans.” “I am buying a mobile home through the owner but I want to build a house on some property that I own and I am not sure about my credit score and wanted to know if there is any way of finding out if I would be eligible for an FHA loan without applying for the loan and | more...

June 27, 2012

FHA 203(H) Home Loans For Disaster Victims

By Joe Wallace

There is much in the news about wildfires, tropical storms and hurricanes. Tropical Storm Debbie has brought large volumes of rain and flooding risks to Florida residents, and Colorado home owners are currently threatened by spreading fires. In presidentially-declared disaster areas, the FHA offers a program to help victims recover. The FHA 203(h) home loan for disaster victims is described on the FHA official site as

June 26, 2012

FHA Loan Rules For 203(K) Rehab Mortgages

By Joe Wallace

The FHA describes its 203(K) Rehab loan as, “the Department’s primary program for the rehabilitation and repair of single family properties. As such, it is an important tool for community and neighborhood revitalization and for expanding homeownership opportunities.” “Since these are the primary goals of HUD, the Department believes that Section 203(k) is an important program and we intend to continue to strongly support the program and the lenders that participate in it.” But what are the rules for an FHA 203(k)? There are some restrictions on the type of property that can be rehabbed under this program, as well as requirements for the condition of eligible properties. For example, “To be eligible, the property must be a one- to four-family dwelling that has been completed for at least one | more...

June 26, 2012

FHA Loan Reader Question: Non-Occupying Co-Borrowers

By Joe Wallace

A reader asks, “Hello, I am interested in getting an FHA 203K mortgage to buy a fixer-upper and add repair costs on top of the loan amount. In the conditions of the FHA 203K plan, there is a stipulation that requires the homeowner to occupy the house. Must all of the people listed on the mortgage/loan live in the home? Can just one person listed live there without violating the terms?” FHA loans do make provisions for non-occupying co-borrowers. However, there are limits which apply to these transactions that can affect the amount of the FHA home loan. In most cases an FHA loan with a non-occupying co-borrower has a limit–for qualified borrowers the loan would be approved for 75% of the loan-to-value ratio, rather than the maximum loan amount. | more...

June 25, 2012

FHA Home Loans and “Qualifying Ratios”

By Joe Wallace

One frequently asked question about FHA home loans goes something like this: “Why do different banks seem to have different standards for FHA home loans?” It’s a legitimate question–some lenders require different credit scores than others, some are stricter about certain types of credit issues or require longer wait times after bankruptcy or foreclosure. Why? The FHA loan rulebook for lenders, HUD 4155.1, has a section in Chapter Four called “Qualifying Ratios” which can help borrowers understand why some of these variances may occur. Every bank has its own set of standards, based on the need to effectively manage risks in lending while allowing credit access to the largest number of qualified borrowers the company can support. What do the FHA rules require a lender to take into consideration when | more...